Guatemala seeks conflict resolution to end mining slump

Guatemala’s government is pushing to end a multi-year mining slump in the country, with a dual-pronged approach focused on resolving legal and social conflicts that have paralyzed the industry.

The country’s three main mines – Pan American Silver’s Escobal, Solway Investment Group’s Fénix and Kappes, Cassiday & Associates’ (KCA) Tambor – are suspended pending court-mandated consultations with indigenous communities.

Operations have also been impacted by protests and roadblocks in recent years, with authorities last month imposing a state of siege in El Estor in Izabal department with the aim of putting a stop to anti-mining demonstrations related to Fénix.

As a result of the suspensions, mining GDP has plummeted from close to US$2.0bn in 2014-15 to around US$800mn in 2018-20, according to data from the Bank of Guatemala (Banguat).

CONSULTATIONS KEY

The first step needed to spur new investment in mining will be to resolve challenges surrounding the ongoing consultations, national competitive program (Pronacom) coordinator Jorge Rolando Paiz Klanderud told BNamericas.

The issue relates to the ILO (International Labour Organization) Convention 169, which sets out the rights of indigenous communities to prior consultation over development projects on their land.

While Guatemala signed up to the convention in 1996, regulations setting out how consultations are conducted were not established.

The three mine suspensions followed injunctions lodged by local NGO Calas, which argued that due process was not followed in granting exploitation licenses by the energy and mines ministry (MEM).

“This paralyzed many of the mining projects that we had in the country,” Paiz said.

Guatemala’s constitutional court has ordered consultations to be completed in indigenous communities around the Escobal and Fénix mines before production can restart.

The government’s aim is to use one consultation – once completed – as a guide for future consultations and the basis of new ILO Convention 169 regulations, Paiz said.

“When it is approved there will be a roadmap … that will form a clear guide for all the other companies and, as such, we will then have regulations 100% established,” he added.

The Escobal consultation is the most advanced, while the initial pre-consultation phase of the process at Fénix was completed earlier in November.

The MEM has signalled that it plans to begin consultation processes at five other projects in 2022, including Tambor, along with talks at 24 non-metallic mining projects.

KCA has lodged an arbitration claim against Guatemala relating to the suspension at Tambor.

WINNING OVER COMMUNITIES

The other element in the government’s push for mining investment growth relates to resolving social conflicts.

“The problem, or maybe the blessing, is that the majority of mining projects are in the poorest regions of Guatemala,” Paiz said, such as the northeast of the country, where people live on an average of around US$300 per year.

“This is the region with the most conflicts in all of Guatemala, but this is where the mining projects are,” he added.

While mining projects have the potential to bring wealth and jobs to some of these areas, operations have been held back by blockades in a string of communities on the trucking route from mines to ports.

Money may not be the answer, however.

“If you give them cash, you can’t give cash to all the communities that are on this long route. Instead we need to do productive projects where you can help communities with certification and training,” Paiz said.

This could involve facilitating communities looking to cultivate fruit to obtain the certification needed to export to Europe, he added.

But this can only happen once the ILO Convention 169 situation is addressed.

“First we have to resolve the 169 [issue] because if we don’t, companies won't not have the legal certainty to continue investing,” according to Paiz.

Mining has been singled out for a key role in Guatemala’s post-pandemic economic recovery, with MEM minister Alberto Pimentel planning a new mining policy aimed at attracting investment.

This six-point plan includes fomenting cultural change to address community conflicts, along with a proposed shake-up of environmental regulations and royalties.

With additional reporting by Ariel Rodriguez.